Role of Human Capital in Economic Development

Our research topic is to analyze the relationship between human capital and economic growth. Economic growths important determinant are physical capital, labor and human capital. But from the recent trend of world economic growth, we found that human capital is playing a key role by taking the place of material capital and labor. Human capital is intimately related to growth as it increases the nation’s capacity to produce goods and services. It also creates more job opportunities and lifts the living standards of a country through increase in income levels. Human capital deals with individuals who learn special skills and knowledge trough education at school, training and experience in the labor market (Barro et al, 2000). However, Economic growth refers to the increase in the amount of the goods and services produced by an economy over time (Jones, 1996). As a result of their skills and education, productivity level would increase because educated workers would work at a faster pace than less educated workers

Human capital refers to the knowledge and skills embodied in people. It is widely recognized that some types of human capital are obtained through experience or interactions with others and with formal education. Human capital is intimately related to the economic growth. Masses believe that capital means a bank account, stock or factory plants in the industrial area. These are also a type of capital that they are assets that increase income and other useful outputs over long periods of time. But such tangible forms of capital are not the only type of capital. There is another very important type of capital known as human capital. It implies to Schooling, a computer training course, expenditures on medical care, and lectures on the virtues of punctuality, expertise and honesty. It is because these factors are also contributing to raise earnings, improve health, or over all increasing the economic growth rate. Therefore, economists regard spending on training, medical care, education and so on as investments in human capital. They are called human capital because people cannot be separated from their knowledge, skills, health, or values in the way they can be separated from their financial and physical assets. The notion of human capital arose out of the awareness that physical capital alone was not enough to explain long term growth. Many social indicators such as educational enrolments and life expectancy became combined in a common term: human capital. Often, human capital is implicitly referred to as formal and informal education. Yet, it can also contain factors such as the costs of raising children, health costs, and ability.

Significance

Economic growth depends on many factors such as the quantity and quality of education, how education can impact on fertility rate, government policies to sustain incentives for human capital, a reduction in the cost of technology adoption and increase expenditure on education. Education and other aspects of human capital is important to economic growth because more educated individuals tend to have higher employment rate and earnings and produce more output relative to those who are less educated. Education is considered as a positive investment that allows individuals to be equipped with knowledge and skills that can improve their employability and productive capacities that would lead to higher earnings in the future and hence, economic growth. Moreover, it has shown that it is not only the amount of formal education that matters, but also that the type of knowledge possessed by labor in a region also plays a key role in determining the level of economic activity. There are various type of education having there own effect on the economic growth such as skilled based education primary education specialized education higher education and education to develop entrepreneur skills, the more the entrepreneurs are in a country, more the business will...

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...DEGREE IN ECONOMICS
COURSE TITLE: HUMANCAPITAL
TITLE OF ASSIGNMENT: ESSAY ON HUMANCAPITAL
ATLANTIC INTERNATIONAL UNIVERSITY
HONOLULU, HAWAII
TABLE OF CONTENTS
CONTENT PAGE
INTRODUCTION---------------------------------------------------------- 4-5
JUSTIFICATION----------------------------------------------------------- 5
HUMANCAPITAL-------------------------------------------------------- 6-9
MICRO AND MACRO ASPECTS
OF HUMANCAPITAL---------------------------------------------------- 9-17
INVESTMENT BY PARENTS IN THE EDUCATION AND OTHER HUMANCAPITAL OF THEIR CHILDREN--------------------------- 17-21
INTERGENERATIONAL TRANSMISSION
OF INEQUALITY---------------------------------------------------------- 22-26
THE LINKS BETWEEN SPECIALIZATION IN PARTICULAR TYPES OF HUMANCAPITAL AND COORDINATION COSTS, GENERAL KNOWLEDGE, AND THE EXTENT OF THE MARKET----------- 26-29
THE RELATION BETWEEN HUMANCAPITAL, POPULATION CHANGE AND ECONOMIC GROWTH------------------------------- 30-34
CONCLUSION-------------------------------------------------------------- 35
REFERENCES--------------------------------------------------------------- 36-37
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CONADEV K34
Economicdevelopment has been influenced by four different major theories that talk about how change is best accomplished. The theories are the Linear Stages of Growth theory, the Structural Change theory, the Neoclassical Counter Revolution theory and the New Growth theory.
The linear stages of growth model is something like the Marshall Plan, which was used to rebuild the war-torn countries of Europe after the war. This theory basically believes that industrialization is the key to the economy’s prosperity and progress. Moreover, according to this theory, industrialization can be achieved by increasing capital as much as possible together with the community. This is their way of developing one’s economy and motherland.
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...This study examines the relationship between humancapitaldevelopment efforts of the Government and
economic growth in Nigeria. It seeks to find out the impact of government recurrent and capital expenditures on
education and health in Nigeria and their effect on economic growth. The data used for the study are from
secondary sources while the augmented Solow model was also adopted. The dependent variable in the model is
the level of real output while the explanatory variables are government capital and recurrent expenditures on
education and health, gross fixed capital formation and the labour force. The result shows that there exists a
positive relationship between government recurrent expenditure on humancapitaldevelopment and the level of
real output, while capital expenditure is negatively related to the level of real output. The study recommends
appropriate channeling of the nation’s capital expenditure on education and health to promote economic growth.
Keywords: Humancapitaldevelopment, Capital and recurrent expenditure, Economic growth
JEL Classification: H5, O43
1. Introduction
Humancapital has been recognized globally as one major factor that is...

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...management skills to mobilize human financial and material resources necessary to bring a project to fruition.
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Reasons of Low Fertility Rates
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Economicdevelopment
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Urbanization development
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Cultural impact...

...I.
ROLE OF HUMANCAPITAL IN ECONOMICDEVELOPMENT: SOME MYTHS AND REALITIES*
A. Background
The world today is very different from the one which experienced the two world wars. During the second half of the twentieth century, considerable advancements in science and technology, along with the establishment of broadly-based governments and strengthening of institutions, have led to significant socio-economic progress and improvement in the lives of a large number of people in many countries. However, there are still many others among us who are lagging behind. The current reality in the Asian region is the existence of significant differences in the state of economicdevelopment among countries. For instance, when GNP per capita income is taken as an indicator of economicdevelopment (see figure I.1), the figures for both Asian least developed countries and South Asian developing countries such
Figure I.1. GNP per capita income (in US$), 1999
10000 9000 8000 7000 US dollars 6000 5000 4000 3000 2000 1000 0
Bangladesh
East Asian DCs
Asian LDCs
Bhutan Cambodia Lao Nepal People's Democratic Republic
South Asian DCs
India Pakistan
Malaysia
Republic of Korea
Thailand
This paper was prepared by Mr M. Aynul Hasan, Chief, Least Developed Countries Section, Development Research and Policy Analysis...